Real estate tokenization is emerging as the future of the industry. The global real estate market, valued at around $379.7 trillion in 2022, is set to be transformed. Sotheby’s International Realty in NYC experts state that blockchain-enabled property tokens can automate transactions and boost liquidity. The market for tokenized real-world assets is growing rapidly, with a projected potential size of $10 – $16 trillion by 2030, and real estate expected to be the largest category.
The US Federal Reserve’s interest rate hikes have led investors to seek collateral-based cash flows from real estate. Even Donald Trump and his son are reportedly developing a real estate token project.
Blockchain can function as a transparent record-keeper for property ownership and transfers. Smart contracts can automate processes, reducing costs. For example, NYC’s ACRIS could potentially be replaced or enhanced. Tokens can represent fractional ownership, with various forms and uses. They can also be programmed for rent distributions and legal compliance.
Tokenization offers faster transactions and makes real estate more accessible, like the fractional equity residential tokenization in the US and EstateX’s platform in the Netherlands.
Comparing real estate tokens and REITs, tokens have different liquidity, diversification, ownership, regulatory, and cost characteristics. Given the complexity, consulting experts is advisable before investing in real estate tokens.
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